Gold falls ahead of budget as tax cut sparks expectations

Gold prices in the local market fell sharply on Thursday, dropping by Tk 4,432 per bhori just hours before Finance Minister Amir Khasru Mahmud Chowdhury presented the national budget, which includes sweeping tax reforms aimed at boosting jewellery exports and formalising the sector.

According to the Bangladesh Jewellers Association (BAJUS), the price of 22-carat (good quality) gold declined by Tk 4,432 per bhori, with the revised rate taking effect at 10:00 am on Thursday.

The latest fall comes amid continued volatility in the domestic bullion market. Prices were reduced by Tk 5,482 per bhori on June 6 and by Tk 3,266 per bhori on June 2, reflecting a steady downward adjustment in recent weeks.

In the budget for the fiscal year 2026�"27, the government has proposed a sharp reduction in tax at source on the supply of gold and gold jewellery�"from 5 percent to 0.5 percent�"in a move aimed at bringing the sector into the formal economy and expanding export potential.

Presenting the budget, the Finance Minister said measures would also be taken to encourage exports of locally manufactured jewellery.

“Due to the high rate of tax at source, the supply of gold and gold jewellery remains informal, and the government is not receiving revenue,” he said in his budget speech. “To bring this business into the formal sector and increase revenue collection, it is proposed to reduce the tax at source on the supply of gold and gold jewellery from 5 percent to 0.5 percent.”

The budget also proposes replacing the existing 5 percent VAT structure on jewellery services with a fixed VAT of Tk 2,500 per 11.66 grams.

He further outlined export-oriented reforms, stating: “To modernise the jewellery industry and diversify exports, I propose to issue a new notification under the bonded warehouse system to facilitate duty-free import of raw materials and the export of jewellery manufactured from them in a fair, transparent, and systematic manner.”